FTSE Launches Global Sustainable Yield Index Series

FTSE Group (“FTSE”), the global index provider, has launched the FTSE Global Sustainable Yield Index Series, designed to measure the performance of equity securities exhibiting relatively high and sustainable yields. The benchmarks reflect the next stage in the evolution of high yield indices, with an emphasis on dividend sustainability.

The FTSE Global Sustainable Yield Index Series has been developed as a result of market demand for yield focused indices that consider the likelihood a dividend will be paid.  The new benchmarks exclude extreme yielding stocks and assess the financial and operating strength of the underlying business. A specific focus is given to companies identified as having strong balance sheets and the ability to generate positive cash flow. Other screening criteria include the payout ratio and incidence of historic and forecast dividend cuts as historically, such stocks are susceptible to falling dividends and consequently lower realised yields.

The new index series will initially consist of eleven individual benchmarks capturing a range of different markets and regions.

Peter Gunthorp, Managing Director, Research & Analytics, FTSE, said: “The FTSE Global Sustainable Yield Index Series represents the evolution of income focused benchmarks. In the current interest rate environment, the indices will be of particular note to market participants focused on the performance of companies exhibiting high and sustainable yields.”